In fact, Bernstein's Colin Davies and Laura Tao contend that "as many as 40% of the companies in Oil Field Services can still be considered distressed," and recommend looking to bigger stronger names in the space:

Looking ahead, the subsegments most likely to sustain recovery are those that can operate under a lower for longer oil price scenario, whether through pricing power, technological advantage, and / or economics of scale. In our covered sectors, this leads to North American focused names such as HP (Outperform TP $66/sh), NBR (Outperform TP $12.50/sh), HAL (Outperform TP $53/sh), and underlying strength of SLB with a tentative trough forming in international markets (Outperform TP $80/sh). While we believe these names are attractive from a longer term value perspective, we recognize negative macro news around decelerating or reversing US horizontal rig count could lead US drilling names to underperform in the near term. We caution potential investors to consider their entry point carefully.

Against that backdrop, JPMorgan's Sean Meakim and Brian Harbour upgraded shares of Patterson-UTI Energy to Overweight from Neutral:

With the stock falling out of bed over the past several weeks (-26% since 7/19 v. OSX -13%, and other drillers avg. -22%), we believe a dislocation in valuation has created an opportunity in PTEN stock. Trading at 5.5x our 2018 EBITDA, PTEN is the cheapest among land drillers in our coverage, despite having solid exposure to the best volume and pricing story left in North America (frac). At 0.6x EV/replacement value, PTEN appears to be getting little credit v. drilling pure plays. While Patterson was the best performing driller YTD through July, it has given back its relative lead post-2Q results, though we believe this has been largely due to positioning, rather than fundamentals. We have always viewed PTEN as one of the best operational and strategic executors in our coverage, however valuation has mostly accounted for this since we initiated. Given the recent “catch up” of the shares to peers, we think PTEN shares are poised to deliver relative outperformance even if the U.S. rig count continues to decline and frac tightness moderates into 2018.

Shares of Patterson-UTI Energy have jumped 5.5% to $16.82 at 12:53 p.m. today, while Halliburton has gained 2.1% to $39.71, Schlumberger has risen 1.8% to $64.52, Nabors Industries has climbed 4.1% to $6.87, and Helmerich & Payne has rallied 2.2% to $43.96.

This copy is for your personal, non-commercial use only. Distribution and use of this material are governed by our Subscriber Agreement and by copyright law. For non-personal use or to order multiple copies, please contact Dow Jones Reprints at 1-800-843-0008 or visit www.djreprints.com.